UPDATE 1-U.S. CFTC wins fund registration court appeal
(Adds detail, background)
WASHINGTON, June 25 (Reuters) - The top U.S. swaps regulator won a legal victory on Tuesday when a U.S. appeals court rejected a plea by the mutual funds industry to block a requirement that its members register with the agency.
The U.S. Chamber of Commerce and the Investment Company Institute had argued that registration with the Commodity Futures Trading Commission duplicated the already existing requirement that they register with the U.S. Securities and Exchange Commission.
A lower court had upheld the CFTC's rule in December, and the U.S. Court of Appeals for the District of Columbia Circuit affirmed that ruling.
The ruling is a shot in the arm for the CFTC which is facing a number of legal challenges as it works to bring large, unregulated swathes of the financial markets under its jurisdiction, an attempt to prevent future meltdowns like the financial crisis of 2007-09.
The Chamber and the ICI did not immediately return a request for comment. The CFTC declined to comment.
Under the new rule, advisers to mutual funds and exchange-traded funds need to register with the CFTC if their commodity trades, including futures, swaps and options, exceed certain thresholds, with the exclusion of pure hedges.
Registration with the CFTC would impose regulatory requirements on advisers, including record-keeping, advertising restrictions and disclosure obligations.
In September, the derivatives industry won a challenge to a CFTC rule to curb commodity speculation by putting caps on trading positions. A judge ruled that the agency had no explicit mandate to introduce the rule, and the CFTC is appealing.
The funds rule stems from a request by the National Futures Association, a self-regulatory industry organization, while the position limits rule is tied to financial industry reforms under the Dodd-Frank law.
The two lawsuits argued that the CFTC failed to properly weigh the costs and benefits of the rules before finalizing them.
The lawyer pleading the cases was Eugene Scalia, the son of Supreme Court Justice Antonin Scalia, who has a winning record in attacking the rulemaking process. He has successfully challenged several SEC rules over the past two years.
But he lost a case against the CFTC earlier this month when the District court dismissed a case by data vendor Bloomberg LP that claimed a new rule on trading swaps on electronic platforms would hurt its business.
Bloomberg had provided no evidence that the CFTC's new rule would hurt its business, the court said in its ruling, and had assumed a worst-case scenario without showing any evidence that would actually happen.
(Additional reporting by Emily Stephenson and Sarah N. Lynch; Editing by Gerald E. McCormick and Jim Marshall)